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Pfizer Reports Third-Quarter 2012 Results

“With regard to our innovative core, I am very pleased with the recent U.S. Food and Drug Administration approval of Bosulif (bosutinib) for chronic myelogenous leukemia, as well as approval of Inlyta (axitinib) for advanced renal cell carcinoma and conditional marketing authorization of Xalkori (critzotinib) for advanced non-small cell lung cancer, both in the EU. I also look forward to regulatory action for tofacitinib in moderate-to-severe rheumatoid arthritis and Eliquis (apixaban) in atrial fibrillation in the U.S., EU and Japan as well as Bosulif in key international markets.”

“Additionally, we filed a registration statement with the Securities and Exchange Commission for the potential initial public offering of a minority stake in our Animal Health business, Zoetis. Given our demonstrated ability to advance our strategic initiatives, I believe we are well-positioned to deliver attractive returns for our shareholders over time,” Mr. Read concluded.

Frank D’Amelio, Chief Financial Officer, stated, “Given our financial performance to date, we are narrowing the ranges for certain components of our 2012 financial guidance. Further, the Board of Directors has authorized a new $10 billion share repurchase program to be utilized over time, upon the sale of the Nutrition
(1) business to Nestlé, which we now expect to close in the next few months. This new program is in addition to the $4.1 billion authorization remaining under our current share repurchase program. So far this year, we have repurchased approximately $5.9 billion, or 255.1 million shares, of our common stock.”

2012 Financial Guidance(7)

Pfizer’s financial guidance, at current exchange rates
(8), is summarized below. Since the Nutrition
(1) business is presented as a discontinued operation, the full-year results of that business only impact the Reported Diluted EPS
(3) and operating cash flow components of our 2012 financial guidance.

On April 23, 2012, Pfizer announced that it entered into an agreement to sell the Nutrition business to Nestlé. The transaction is expected to close in the next few months, assuming the receipt of the required regulatory clearances and the satisfaction of other closing conditions. As a result of Pfizer’s decision to divest this business, the operating results of the Nutrition business are reported as Discontinued Operations – net of tax in the consolidated statements of income for all periods.

(2)

"Adjusted Income" and its components and "Adjusted Diluted Earnings Per Share (EPS)" are defined as reported U.S. generally accepted accounting principles (GAAP) net income (3) and its components and reported diluted EPS (3) excluding purchase accounting adjustments, acquisition-related costs, discontinued operations and certain significant items. Adjusted Cost of Sales, Adjusted Selling, Informational and Administrative (SI&A) expenses, Adjusted Research and Development (R&D) expenses and Adjusted Other (Income)/Deductions are income statement line items prepared on the same basis, and, therefore, components of the overall adjusted income measure. As described under Adjusted Income in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of Pfizer's Form 10-Q for the fiscal quarter ended July 1, 2012, management uses adjusted income, among other factors, to set performance goals and to measure the performance of the overall company. We believe that investors' understanding of our performance is enhanced by disclosing this measure. Reconciliations of certain GAAP reported to non-GAAP adjusted information for the third quarter and first nine months of 2012 and 2011, as well as reconciliations of full-year 2012 guidance for adjusted income and adjusted diluted EPS to full-year 2012 guidance for reported net income (3) and reported diluted EPS (3), are provided in the materials accompanying this report. The adjusted income and its components and adjusted diluted EPS measures are not, and should not be viewed as, substitutes for U.S. GAAP net income and its components and diluted EPS.

(3)

“Reported Net Income” is defined as net income attributable to Pfizer Inc. in accordance with U.S. GAAP. “Reported Diluted EPS” is defined as reported diluted EPS attributable to Pfizer Inc. common shareholders in accordance with U.S. GAAP.

(4)

On August 1, 2011, Pfizer completed the sale of Capsugel to an affiliate of Kohlberg Kravis Roberts & Co. L.P. The operating results associated with Capsugel and the gain on the sale of Capsugel are reported as Discontinued operations – net of tax in the consolidated statements of income for the three and nine months ended October 2, 2011. Additionally, due to the acquisition of King Pharmaceuticals, Inc. (King), legacy King operations are reflected in the results beginning January 31, 2011. Therefore, in accordance with Pfizer’s domestic and international reporting periods, the operating results for the first nine months of 2011 reflect approximately eight months of King’s U.S. operations and approximately seven months of King’s international operations.

(5)

For a description of each business unit, see Note 13A to Pfizer’s condensed consolidated financial statements included in Pfizer’s Form 10-Q for the fiscal quarter ended July 1, 2012.

The 2012 financial guidance includes the revenues and expenses related to the Nutrition business, which is reflected as a discontinued operation, but does not include the gain on the pending sale of the Nutrition business. Does not assume the completion of any business-development transactions not completed as of September 30, 2012, including any one-time upfront payments associated with such transactions. Also excludes the potential effects of the resolution of litigation-related matters not substantially resolved as of September 30, 2012, except for charges for such matters that have been recorded during the first nine months of 2012.

(8)

The current exchange rates assumed in connection with the 2012 financial guidance are a blend of the actual exchange rates in effect during the first nine months of 2012 and the mid-October 2012 exchange rates for the remainder of the year.

PFIZER INC. AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF INCOME (a)

(UNAUDITED)

(millions, except per common share data)

Third Quarter

% Incr. /

Nine Months

% Incr. /

2012

2011

(Decr.)

2012

2011

(Decr.)

Revenues

$

13,976

$

16,609

(16)

$

43,918

$

49,118

(11)

Costs and expenses:

Cost of sales (b)

2,665

3,409

(22)

8,162

10,449

(22)

Selling, informational and administrative expenses (b)

3,847

4,457

(14)

11,801

13,635

(13)

Research and development expenses (b)

1,981

2,176

(9)

5,734

6,487

(12)

Amortization of intangible assets (c)

1,228

1,389

(12)

3,939

4,138

(5)

Restructuring charges and certain acquisition-related costs

302

1,090

(72)

1,089

2,458

(56)

Other deductions--net

962

547

76

3,283

1,802

82

Income from continuing operations before provision/(benefit) for taxes on income

2,991

3,541

(16)

9,910

10,149

(2)

Provision/(benefit) for taxes on income

(119

)

1,216

(110)

1,882

3,167

(41)

Income from continuing operations

3,110

2,325

34

8,028

6,982

15

Discontinued operations:

Income from discontinued operations--net of tax

104

96

8

249

303

(18)

Gain on sale of discontinued operations--net of tax

-

1,328

(100)

-

1,316

(100)

Discontinued operations--net of tax

104

1,424

(93)

249

1,619

(85)

Net income before allocation to noncontrolling interests

3,214

3,749

(14)

8,277

8,601

(4)

Less: Net income attributable to noncontrolling interests

6

11

(45)

22

31

(29)

Net income attributable to Pfizer Inc.

$

3,208

$

3,738

(14)

$

8,255

$

8,570

(4)

Earnings per common share--basic: (d)

Income from continuing operations attributable to Pfizer Inc. common shareholders

$

0.42

$

0.30

40

$

1.07

$

0.88

22

Discontinued operations--net of tax

0.01

0.18

(94)

0.03

0.21

(86)

Net income attributable to Pfizer Inc. common shareholders

$

0.43

$

0.48

(10)

$

1.10

$

1.09

1

Earnings per common share--diluted: (d)

Income from continuing operations attributable to Pfizer Inc. common shareholders

$

0.41

$

0.30

37

$

1.06

$

0.88

20

Discontinued operations--net of tax

0.01

0.18

(94)

0.03

0.20

(85)

Net income attributable to Pfizer Inc. common shareholders

$

0.43

$

0.48

(10)

$

1.09

$

1.08

1

Weighted-average shares used to calculate earnings per common share:

Basic

7,436

7,770

7,483

7,877

Diluted

7,508

7,810

7,550

7,925

(a)

The above financial statements present the three and nine months ended September 30, 2012 and October 2, 2011. Subsidiaries operating outside the United States are included for the three and nine months ended August 26, 2012 and August 28, 2011.

Beginning in the second quarter of 2012, as a result of our decision to sell the Nutrition business, we report the operating results of the Nutrition business as Discontinued operations: Income from discontinued operations--net of tax for all periods presented.

On August 1, 2011, we completed the sale of our Capsugel business and recognized a gain on the sale in Discontinued operations: Gain on sale of discontinued operations--net of tax for the three and nine months ended October 2, 2011. The operating results of this business are reported as Discontinued operations: Income from discontinued operations--net of tax for the three and nine months ended October 2, 2011.

On January 31, 2011, we completed a tender offer for the outstanding shares of common stock of King Pharmaceuticals, Inc. (King) and, commencing from that date, our financial statements include the assets, liabilities, operating results and cash flows of King. As a result, and in accordance with our domestic and international reporting periods, our operating results for the nine months ended October 2, 2011 reflect approximately eight months of King’s U.S. operations and approximately seven months of King’s international operations.

Certain amounts and percentages may reflect rounding adjustments.

See Supplemental Information that accompanies these materials for additional details.

The financial results for the three and nine months ended September 30, 2012 are not necessarily indicative of the results which could ultimately be achieved for the full year.

(b)

Exclusive of amortization of intangible assets, except as discussed in footnote (c) below.

(c)

Amortization expense related to acquired intangible assets that contribute to our ability to sell, manufacture, research, market and distribute products, compounds and intellectual property is included in Amortization of intangible assets as these intangible assets benefit multiple business functions. Amortization expense related to acquired intangible assets that are associated with a single function is included in Cost of sales, Selling, informational and administrative expenses or Research and development expenses, as appropriate.

(d)

EPS amounts may not add due to rounding.

PFIZER INC. AND SUBSIDIARY COMPANIES

RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION

CERTAIN LINE ITEMS

(UNAUDITED)

(millions of dollars, except per common share data)

Quarter Ended September 30, 2012

PurchaseAccountingAdjustments

Acquisition-RelatedCosts (2)

CertainSignificantItems (3)

Non-GAAPAdjusted (a)

GAAPReported(1)

DiscontinuedOperations

Revenues

$

13,976

$

-

$

-

$

-

$

-

$

13,976

Cost of sales (b)

2,665

2

(78

)

-

(24

)

2,565

Selling, informational and administrative expenses (b)

3,847

(2

)

(3

)

-

(113

)

3,729

Research and development expenses (b)

1,981

1

-

-

(47

)

1,935

Amortization of intangible assets (c)

1,228

(1,186

)

-

-

-

42

Restructuring charges and certain acquisition-related costs

302

-

(149

)

-

(153

)

-

Other deductions--net

962

45

-

-

(821

)

186

Income from continuing operations before provision/(benefit) for taxes on income

2,991

1,140

230

-

1,158

5,519

Provision/(benefit) for taxes on income

(119

)

327

40

-

1,316

1,564

Income from continuing operations

3,110

813

190

-

(158

)

3,955

Discontinued operations--net of tax

104

-

-

(104

)

-

-

Net income attributable to noncontrolling interests

6

-

-

-

-

6

Net income attributable to Pfizer Inc.

3,208

813

190

(104

)

(158

)

3,949

Earnings per common share attributable to Pfizer Inc.--diluted (d)

0.43

0.11

0.03

(0.01

)

(0.02

)

0.53

Nine Months Ended September 30, 2012

Purchase

Acquisition-

Certain

GAAP

Accounting

Related

Discontinued

Significant

Non-GAAP

Reported(1)

Adjustments

Costs (2)

Operations

Items (3)

Adjusted (a)

Revenues

$

43,918

$

-

$

-

$

-

$

-

$

43,918

Cost of sales (b)

8,162

(9

)

(214

)

-

(51

)

7,888

Selling, informational and administrative expenses (b)

11,801

4

(8

)

-

(174

)

11,623

Research and development expenses (b)

5,734

3

(5

)

-

(386

)

5,346

Amortization of intangible assets (c)

3,939

(3,763

)

-

-

-

176

Restructuring charges and certain acquisition-related costs

1,089

-

(423

)

-

(666

)

-

Other deductions--net

3,283

15

-

-

(2,644

)

654

Income from continuing operations before provision/(benefit) for taxes on income

9,910

3,750

650

-

3,921

18,231

Provision/(benefit) for taxes on income

1,882

1,025

161

-

2,177

5,245

Income from continuing operations

8,028

2,725

489

-

1,744

12,986

Discontinued operations--net of tax

249

-

-

(249

)

-

-

Net income attributable to noncontrolling interests

22

-

-

-

-

22

Net income attributable to Pfizer Inc.

8,255

2,725

489

(249

)

1,744

12,964

Earnings per common share attributable to Pfizer Inc.--diluted (d)

1.09

0.36

0.06

(0.03

)

0.23

1.72

(a)

Non-GAAP Adjusted income and its components and Non-GAAP Adjusted diluted EPS are not, and should not be viewed as, substitutes for U.S. GAAP net income and its components and diluted EPS. Despite the importance of these measures to management in goal setting and performance measurement, we stress that Non-GAAP Adjusted income and its components and Non-GAAP Adjusted diluted EPS are Non-GAAP financial measures that have no standardized meaning prescribed by U.S. GAAP and, therefore, have limits in their usefulness to investors. Because of the non-standardized definitions, Non-GAAP Adjusted income and its components and Non-GAAP Adjusted diluted EPS (unlike U.S. GAAP net income and its components and diluted EPS) may not be comparable to the calculation of similar measures of other companies. Non-GAAP Adjusted income and its components and Non-GAAP Adjusted diluted EPS are presented solely to permit investors to more fully understand how management assesses performance.

(b)

Exclusive of amortization of intangible assets, except as discussed in footnote (c) below.

(c)

Amortization expense related to acquired intangible assets that contribute to our ability to sell, manufacture, research, market and distribute products, compounds and intellectual property is included in Amortization of intangible assets as these intangible assets benefit multiple business functions. Amortization expense related to acquired intangible assets that are associated with a single function is included in Cost of sales, Selling, informational and administrative expenses or Research and development expenses, as appropriate.

(d)

EPS amounts may not add due to rounding.

See end of tables for notes (1), (2) and (3).

Certain amounts may reflect rounding adjustments.

PFIZER INC. AND SUBSIDIARY COMPANIES

RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION

CERTAIN LINE ITEMS

(UNAUDITED)

(millions of dollars, except per common share data)

Quarter Ended October 2, 2011

Purchase

Acquisition-

Certain

GAAP

Accounting

Related

Discontinued

Significant

Non-GAAP

Reported(1)

Adjustments

Costs (2)

Operations

Items (3)

Adjusted (a)

Revenues

$

16,609

$

-

$

-

$

-

$

-

$

16,609

Cost of sales (b)

3,409

(286

)

(68

)

-

2

3,057

Selling, informational and administrative expenses (b)

4,457

(9

)

(18

)

-

(33

)

4,397

Research and development expenses (b)

2,176

3

(6

)

-

(150

)

2,023

Amortization of intangible assets (c)

1,389

(1,352

)

-

-

-

37

Restructuring charges and certain acquisition-related costs

1,090

-

(202

)

-

(888

)

-

Other deductions--net

547

(53

)

-

-

(240

)

254

Income from continuing operations before provision/(benefit) for taxes on income

3,541

1,697

294

-

1,309

6,841

Provision/(benefit) for taxes on income

1,216

445

54

-

419

2,134

Income from continuing operations

2,325

1,252

240

-

890

4,707

Discontinued operations--net of tax (d)

1,424

-

-

(1,424

)

-

-

Net income attributable to noncontrolling interests

11

-

-

-

-

11

Net income attributable to Pfizer Inc.

3,738

1,252

240

(1,424

)

890

4,696

Earnings per common share attributable to Pfizer Inc.--diluted (e)

0.48

0.16

0.03

(0.18

)

0.11

0.60

Nine Months Ended October 2, 2011

PurchaseAccountingAdjustments

Acquisition-RelatedCosts (2)

CertainSignificantItems (3)

GAAPReported(1)

DiscontinuedOperations

Non-GAAPAdjusted (a)

Revenues

$

49,118

$

-

$

-

$

-

$

-

$

49,118

Cost of sales (b)

10,449

(1,081

)

(410

)

-

(7

)

8,951

Selling, informational and administrative expenses (b)

13,635

(6

)

(41

)

-

(39

)

13,549

Research and development expenses (b)

6,487

-

(9

)

-

(398

)

6,080

Amortization of intangible assets (c)

4,138

(4,039

)

-

-

-

99

Restructuring charges and certain acquisition-related costs

2,458

-

(996

)

-

(1,462

)

-

Other deductions--net

1,802

(71

)

-

-

(1,269

)

462

Income from continuing operations before provision/(benefit) for taxes on income

10,149

5,197

1,456

-

3,175

19,977

Provision/(benefit) for taxes on income

3,167

1,345

320

-

1,059

5,891

Income from continuing operations

6,982

3,852

1,136

-

2,116

14,086

Discontinued operations--net of tax (d)

1,619

-

-

(1,619

)

-

-

Net income attributable to noncontrolling interests

31

-

-

-

-

31

Net income attributable to Pfizer Inc.

8,570

3,852

1,136

(1,619

)

2,116

14,055

Earnings per common share attributable to Pfizer Inc.--diluted (e)

1.08

0.49

0.14

(0.20

)

0.27

1.77

(a)

Non-GAAP Adjusted income and its components and Non-GAAP Adjusted diluted EPS are not, and should not be viewed as, substitutes for U.S. GAAP net income and its components and diluted EPS. Despite the importance of these measures to management in goal setting and performance measurement, we stress that Non-GAAP Adjusted income and its components and Non-GAAP Adjusted diluted EPS are Non-GAAP financial measures that have no standardized meaning prescribed by U.S. GAAP and, therefore, have limits in their usefulness to investors. Because of the non-standardized definitions, Non-GAAP Adjusted income and its components and Non-GAAP Adjusted diluted EPS (unlike U.S. GAAP net income and its components and diluted EPS) may not be comparable to the calculation of similar measures of other companies. Non-GAAP Adjusted income and its components and Non-GAAP Adjusted diluted EPS are presented solely to permit investors to more fully understand how management assesses performance.

(b)

Exclusive of amortization of intangible assets, except as discussed in footnote (c) below.

(c)

Amortization expense related to acquired intangible assets that contribute to our ability to sell, manufacture, research, market and distribute products, compounds and intellectual property is included in Amortization of intangible assets as these intangible assets benefit multiple business functions. Amortization expense related to acquired intangible assets that are associated with a single function is included in Cost of sales, Selling, informational and administrative expenses or Researchand development expenses, as appropriate.

(d)

On August 1, 2011, we completed the sale of our Capsugel business. The gain recognized related to the sale of this business, as well as the operating results of this business, are included in GAAP Reported Discontinued operations—net of tax.

(e)

EPS amounts may not add due to rounding.

See end of tables for notes (1), (2) and (3).

Certain amounts may reflect rounding adjustments.

PFIZER INC. AND SUBSIDIARY COMPANIES

NOTES TO RECONCILIATION OF GAAP REPORTED TO NON-GAAP ADJUSTED INFORMATION

CERTAIN LINE ITEMS*

(UNAUDITED)

1)

The financial statements present the three and nine months ended September 30, 2012 and October 2, 2011. Subsidiaries operating outside the United States are included for the three and nine months ended August 26, 2012 and August 28, 2011.

Beginning in the second quarter of 2012, as a result of our decision to sell the Nutrition business, we report the operating results of the Nutrition business as Discontinued operations: Income from discontinued operations--net of tax for all periods presented.

On August 1, 2011, we completed the sale of our Capsugel business and recognized a gain on the sale in Discontinued operations: Gain on sale of discontinued operations--net of tax for the three and nine months ended October 2, 2011. The operating results of this business are reported as Discontinued operations: Income from discontinued operations--net of tax for the three and nine months ended October 2, 2011.

On January 31, 2011, we completed a tender offer for the outstanding shares of common stock of King Pharmaceuticals, Inc. (King) and, commencing from that date, our financial statements include the assets, liabilities, operating results and cash flows of King. As a result, and in accordance with our domestic and international reporting periods, our operating results for the nine months ended October 2, 2011 reflect approximately eight months of King’s U.S. operations and approximately seven months of King’s international operations.

2)

Acquisition-related costs include the following:

Third Quarter

Nine Months

(millions of dollars)

2012

2011

2012

2011

Transaction costs (a)

$

-

$

5

$

1

$

28

Integration costs (a)

87

184

295

562

Restructuring charges (a)

62

13

127

406

Additional depreciation--asset restructuring (b)

81

92

227

460

Total acquisition-related costs--pre-tax

230

294

650

1,456

Income taxes (c)

(40

)

(54

)

(161

)

(320

)

Total acquisition-related costs--net of tax

$

190

$

240

$

489

$

1,136

(a)

Transaction costs represent external costs directly related to acquired businesses and primarily include expenditures for banking, legal, accounting and other similar services. Integration costs represent external, incremental costs directly related to integrating acquired businesses, and primarily include expenditures for consulting and the integration of systems and processes. Restructuring charges include employee termination costs, asset impairments and other exit costs associated with business combinations. The sum of these costs and charges is included in Restructuring charges and certain acquisition-related costs.

(b)

Represents the impact of changes in the estimated useful lives of assets involved in restructuring actions related to acquisitions. Included in Cost ofsales ($78 million) and Selling, informational and administrative expenses ($3 million) for the three months ended September 30, 2012. Included in Cost ofsales ($214 million), Selling, informational and administrative expenses ($8 million) and Research and development expenses ($5 million) for the nine months ended September 30, 2012. Included in Cost of sales ($68 million), Selling, informational and administrative expenses ($18 million) and Research and development expenses ($6 million) for the three months ended October 2, 2011. Included in Cost of sales ($410 million) , Selling, informational and administrative expenses ($41 million) and Research and development expenses ($9 million) for the nine months ended October 2, 2011.

Costs associated with the potential separation of the Animal Health business (e)

100

8

191

8

Other

15

(8

)

52

16

Total certain significant items--pre-tax

1,158

1,309

3,921

3,175

Income taxes (f)

(1,316

)

(419

)

(2,177

)

(1,059

)

Total certain significant items--net of tax

$

(158

)

$

890

$

1,744

$

2,116

(a)

Included in Restructuring charges and certain acquisition-related costs, primarily related to our cost-reduction and productivity initiatives.

(b)

Primarily related to our cost-reduction and productivity initiatives. Included in Cost of Sales ($19 million), Selling, informational and administrative expenses ($45 million) and Research and development expenses ($47 million) for the three months ended September 30, 2012. Included in Cost of Sales ($23 million), Selling, informational and administrative expenses ($77 million) and Research and development expenses ($386 million) for the nine months ended September 30, 2012. Included in Selling, informational and administrative expenses ($33 million) and Research and development expenses ($150 million) for the three months ended October 2, 2011. Included in Selling, informational and administrative expenses ($39 million) and Research and development expenses ($398 million) for the nine months ended October 2, 2011.

(c)

Included in Other deductions--net. In the third quarter of 2012, primarily includes a $491 million charge resulting from an agreement-in-principle with the U.S. Department of Justice to resolve an investigation into Wyeth’s historical promotional practices in connection with Rapamune. In the first nine months of 2012, primarily includes the aforementioned $491 million charge related to Rapamune, a $450 million settlement of a lawsuit by Brigham Young University related to Celebrex, and charges for hormone-replacement therapy litigation. In 2011, primarily includes charges for hormone-replacement therapy litigation.

(d)

Primarily included in Other deductions--net. In the first nine months of 2012, primarily includes certain intangible assets acquired in connection with our acquisitions of Wyeth and King, including in-process research and development (IPR&D) intangible assets. In the third quarter and first nine months of 2011, primarily includes certain intangible assets acquired in connection with our acquisition of Wyeth, including IPR&D intangible assets.

(e)

Costs incurred in connection with the potential initial public offering of a minority stake in our Animal Health business, Zoetis, Inc. Includes expenditures for banking, legal, accounting and similar services related to the potential transaction, as well as costs incurred associated with the potential separation of Animal Health employees, net assets and activities from Pfizer, such as consulting and systems costs. Included in Selling, informational and administrative expenses ($68 million) and Other deductions--net ($32 million) for the three months ended September 30, 2012. Included in Selling, informational and administrative expenses ($98 million) and Other deductions--net ($93 million) for the nine months ended September 30, 2012. Included in Selling, informational and administrative expenses for the three and nine months ended October 2, 2011.

(f)

Included in Provision/(benefit) for taxes on income. Includes a settlement with the U.S. IRS related to audits for multiple tax years that favorably impacted GAAP Reported net income by $1.1 billion, representing tax and interest, for the three and nine months ended September 30, 2012.

*

Non-GAAP Adjusted income and its components and Non-GAAP Adjusted diluted EPS are not, and should not be viewed as, substitutes for U.S. GAAP net income and its components and diluted EPS. Despite the importance of these measures to management in goal setting and performance measurement, we stress that Non-GAAP Adjusted income and its components and Non-GAAP Adjusted diluted EPS are Non-GAAP financial measures that have no standardized meaning prescribed by U.S. GAAP and, therefore, have limits in their usefulness to investors. Because of the non-standardized definitions, Non-GAAP Adjusted income and its components and Non-GAAP Adjusted diluted EPS (unlike U.S. GAAP net income and its components and diluted EPS) may not be comparable to the calculation of similar measures of other companies. Non-GAAP Adjusted income and its components and Non-GAAP Adjusted diluted EPS are presented solely to permit investors to more fully understand how management assesses performance.

PFIZER INC.

BUSINESS REVENUES (1)

FIRST NINE MONTHS OF 2012 AND 2011

(UNAUDITED)

(millions of dollars)

2012

2011

Change

ForeignExchange

Operational

Primary Care

$

11,725

$

17,259

(32

%)

(1

%)

(31

%)

Specialty Care

10,483

11,425

(8

%)

(2

%)

(6

%)

Established Products

7,865

6,914

14

%

(2

%)

16

%

Emerging Markets

7,308

7,031

4

%

(6

%)

10

%

Oncology

940

982

(4

%)

(3

%)

(1

%)

Biopharmaceutical

38,321

43,611

(12

%)

(2

%)

(10

%)

Animal Health

3,128

3,078

2

%

(4

%)

6

%

Consumer Healthcare

2,276

2,218

3

%

(2

%)

5

%

Other

193

211

(9

%)

(1

%)

(8

%)

Total

$

43,918

$

49,118

(11

%)

(2

%)

(9

%)

(1)

For a description of each business unit, see Note 13A to Pfizer's condensed consolidated financial statements included in Pfizer's Form 10-Q for the fiscal quarter ended July 1, 2012.

PFIZER INC.

ADJUSTED SELECTED COSTS AND EXPENSES (1)

FIRST NINE MONTHS OF 2012 AND 2011

(UNAUDITED)

($ in millions)(Favorable)/Unfavorable

2012

2011

% Change

ForeignExchange

Operational

Adjusted Cost of Sales (1)

$

7,888

$

8,951

(12%)

(8%)

(4%)

As a Percent of Revenues

18.0%

18.2%

N/A

N/A

N/A

Adjusted SI&A Expenses (1)

11,623

13,549

(14%)

(2%)

(12%)

Adjusted R&D Expenses (1)

5,346

6,080

(12%)

(1%)

(11%)

Total

$

24,857

$

28,580

(13%)

(4%)

(9%)

(1) Adjusted cost of sales, Adjusted selling, informational and administrative (SI&A) expenses and Adjusted research and development (R&D) expenses are defined as the corresponding reported U.S. generally accepted accounting principles (GAAP) income statement line items excluding purchase accounting adjustments, acquisition-related costs, discontinued operations and certain significant items. Reconciliations of certain GAAP reported to non-GAAP adjusted information for the third quarter and first nine months of 2012 and 2011 are provided in the materials accompanying this report. These adjusted income statement line item measures are not, and should not be viewed as, substitutes for the corresponding U.S. GAAP line items.

PFIZER INC.

REVENUES

THIRD QUARTER 2012 and 2011

(UNAUDITED)

(millions of dollars)

WORLDWIDE

UNITED STATES

TOTAL INTERNATIONAL(a)

2012

2011

% Change

2012

2011

% Change

2012

2011

% Change

Total

Oper.

Total

Total

Oper.

TOTAL REVENUES

$13,976

$16,609

(16%)

(12%)

$5,627

$6,879

(18%)

$8,349

$9,730

(14%)

(7%)

REVENUES FROM BIOPHARMACEUTICAL PRODUCTS:

$12,117

$14,747

(18%)

(14%)

$4,769

$6,019

(21%)

$7,348

$8,728

(16%)

(9%)

Lipitor (b)

749

2,602

(71%)

(70%)

192

1,470

(87%)

557

1,132

(51%)

(48%)

Lyrica

1,036

961

8%

14%

430

379

13%

606

582

4%

14%

Enbrel (Outside the U.S. and Canada)

893

957

(7%)

4%

-

-

-

893

957

(7%)

4%

Prevnar 13/Prevenar 13

868

1,006

(14%)

(12%)

440

454

(3%)

428

552

(22%)

(19%)

Celebrex

676

643

5%

7%

438

405

8%

238

238

-

6%

Viagra

517

493

5%

9%

287

244

18%

230

249

(8%)

-

Norvasc

319

350

(9%)

(6%)

13

5

160%

306

345

(11%)

(9%)

Zyvox

328

321

2%

7%

158

154

3%

170

167

2%

11%

Sutent

294

298

(1%)

7%

82

78

5%

212

220

(4%)

7%

Premarin family

262

267

(2%)

(1%)

237

241

(2%)

25

26

(4%)

3%

Genotropin

212

215

(1%)

5%

59

46

28%

153

169

(9%)

(2%)

Xalatan/Xalacom

181

277

(35%)

(29%)

9

9

-

172

268

(36%)

(31%)

BeneFIX

201

178

13%

18%

96

76

26%

105

102

3%

12%

Detrol/Detrol LA

176

213

(17%)

(15%)

112

136

(18%)

64

77

(17%)

(10%)

Vfend

187

171

9%

17%

21

-

100%

166

171

(3%)

3%

Chantix/Champix

146

156

(6%)

(3%)

62

68

(9%)

84

88

(5%)

1%

Pristiq

152

146

4%

6%

120

119

1%

32

27

19%

32%

Refacto AF/Xyntha

150

140

7%

17%

28

32

(13%)

122

108

13%

25%

Revatio

135

140

(4%)

1%

78

80

(3%)

57

60

(5%)

6%

Zoloft

129

139

(7%)

(3%)

17

15

13%

112

124

(10%)

(5%)

Medrol

113

127

(11%)

(7%)

24

33

(27%)

89

94

(5%)

1%

Zosyn/Tazocin

109

149

(27%)

(24%)

39

75

(48%)

70

74

(5%)

1%

Effexor

107

165

(35%)

(31%)

37

52

(29%)

70

113

(38%)

(31%)

Geodon/Zeldox

57

263

(78%)

(76%)

26

217

(88%)

31

46

(33%)

(21%)

Zithromax/Zmax

89

93

(4%)

(1%)

3

4

(25%)

86

89

(3%)

1%

Prevnar/Prevenar (7-valent)

81

98

(17%)

10%

-

-

-

81

98

(17%)

10%

Fragmin

91

95

(4%)

4%

11

9

22%

80

86

(7%)

3%

Relpax

92

86

7%

11%

56

47

19%

36

39

(8%)

2%

Rapamune

92

96

(4%)

1%

49

47

4%

43

49

(12%)

(2%)

Cardura

79

92

(14%)

(9%)

2

1

100%

77

91

(15%)

(9%)

Aricept (c)

71

117

(39%)

(34%)

-

-

-

71

117

(39%)

(34%)

Tygacil

82

76

8%

15%

37

38

(3%)

45

38

18%

34%

EpiPen

67

59

14%

14%

52

47

11%

15

12

25%

23%

Xanax XR

66

77

(14%)

(6%)

13

13

-

53

64

(17%)

(7%)

BMP2

58

83

(30%)

(30%)

58

77

(25%)

-

6

(100%)

(100%)

Caduet

68

150

(55%)

(53%)

13

80

(84%)

55

70

(21%)

(16%)

Sulperazon

62

51

22%

22%

-

-

-

62

51

22%

22%

Diflucan

61

72

(15%)

(9%)

1

-

100%

60

72

(17%)

(11%)

Dalacin/Cleocin

74

51

45%

50%

40

15

167%

34

36

(6%)

(1%)

Neurontin

52

67

(22%)

(18%)

12

14

(14%)

40

53

(25%)

(17%)

Unasyn

54

58

(7%)

(3%)

-

3

(100%)

54

55

(2%)

1%

Aromasin

51

85

(40%)

(36%)

3

8

(63%)

48

77

(38%)

(34%)

Arthrotec

50

61

(18%)

(15%)

28

32

(13%)

22

29

(24%)

(19%)

Inspra

51

51

-

12%

1

1

-

50

50

-

13%

Toviaz

52

49

6%

10%

29

26

12%

23

23

-

8%

Metaxalone/Skelaxin

55

57

(4%)

(5%)

55

57

(4%)

-

-

-

-

Methotrexate

50

51

(2%)

5%

-

-

-

50

51

(2%)

5%

Protonix

50

65

(23%)

(23%)

50

65

(23%)

-

-

-

-

Alliance Revenue (d)

879

919

(4%)

(3%)

687

571

20%

192

348

(45%)

(42%)

All other biopharmaceutical products

1,643

1,611

2%

8%

564

476

18%

1,079

1,135

(5%)

3%

All other established products (e)

1,407

1,406

-

6%

453

388

17%

954

1,018

(6%)

2%

REVENUES FROM OTHER PRODUCTS:

ANIMAL HEALTH

$1,017

$1,041

(2%)

4%

$451

$433

4%

$566

$608

(7%)

4%

CONSUMER HEALTHCARE

$780

$767

2%

6%

$388

$408

(5%)

$392

$359

9%

18%

OTHER(f)

$62

$54

15%

19%

$19

$19

-

$43

$35

23%

28%

(a)

Total International represents Developed Europe region + Developed Rest of World region + Emerging Markets region. Details for these regions are located on the following page.

(b)

Lipitor lost exclusivity in the U.S. in November 2011 and various other markets in 2011 and 2012. This loss of exclusivity reduced branded worldwide revenues by $1.9 billion in the third quarter of 2012, in comparison with the third quarter of 2011.

(c)

Represents direct sales under license agreement with Eisai Co., Ltd.

(d)

Includes Enbrel (in the U.S. and Canada), Aricept, Exforge, Rebif and Spiriva.

(e)

Includes sales of generic atorvastatin. All other established products is a subset of All other biopharmaceutical products.

Developed Europe region includes the following markets: Western Europe, Finland and the Scandinavian countries.

(b)

Developed Rest of World region includes the following markets: Australia, Canada, Japan, New Zealand and South Korea.

(c)

Emerging Markets region includes, but is not limited to, the following markets: Asia (excluding Japan and South Korea), Latin America, Middle East, Africa, Central and Eastern Europe and Turkey.

(d)

Lipitor lost exclusivity in various international markets in 2011 and 2012. This loss of exclusivity reduced branded international revenues by $579 million in the third quarter of 2012, in comparison with the third quarter of 2011.0

(e)

Represents direct sales under license agreement with Eisai Co., Ltd.

(f)

Includes Enbrel (in Canada), Aricept, Exforge, Rebif and Spiriva.

(g)

All other established products is a subset of All other biopharmaceutical products.

Certain amounts and percentages may reflect rounding adjustments.

PFIZER INC.

REVENUES

NINE MONTHS 2012 and 2011

(UNAUDITED)

(millions of dollars)

WORLDWIDE

UNITED STATES

TOTAL INTERNATIONAL(a)

2012

2011

% Change

2012

2011

% Change

2012

2011

% Change

Total

Oper.

Total

Total

Oper.

TOTAL REVENUES

$43,918

$49,118

(11%)

(9%)

$17,303

$20,603

(16%)

$26,615

$28,515

(7%)

(2%)

REVENUES FROM BIOPHARMACEUTICAL PRODUCTS:

$38,321

$43,611

(12%)

(10%)

$14,899

$18,246

(18%)

$23,422

$25,365

(8%)

(4%)

Lipitor (b)

3,364

7,578

(56%)

(55%)

871

4,187

(79%)

2,493

3,391

(26%)

(25%)

Lyrica

3,026

2,695

12%

16%

1,229

1,116

10%

1,797

1,579

14%

20%

Enbrel (Outside the U.S. and Canada)

2,780

2,741

1%

8%

-

-

-

2,780

2,741

1%

8%

Prevnar 13/Prevenar 13

2,725

2,823

(3%)

(1%)

1,423

1,533

(7%)

1,302

1,290

1%

5%

Celebrex

1,969

1,856

6%

7%

1,266

1,179

7%

703

677

4%

7%

Viagra

1,498

1,458

3%

5%

822

732

12%

676

726

(7%)

(3%)

Norvasc

1,001

1,081

(7%)

(7%)

38

23

65%

963

1,058

(9%)

(9%)

Zyvox

996

965

3%

6%

490

486

1%

506

479

6%

11%

Sutent

913

870

5%

10%

255

218

17%

658

652

1%

8%

Premarin family

797

757

5%

6%

724

683

6%

73

74

(1%)

6%

Genotropin

619

654

(5%)

(2%)

150

144

4%

469

510

(8%)

(4%)

Xalatan/Xalacom

617

960

(36%)

(33%)

30

159

(81%)

587

801

(27%)

(24%)

BeneFIX

577

518

11%

14%

272

223

22%

305

295

3%

8%

Detrol/Detrol LA

576

668

(14%)

(12%)

362

422

(14%)

214

246

(13%)

(10%)

Vfend

543

558

(3%)

1%

64

64

-

479

494

(3%)

1%

Chantix/Champix

496

545

(9%)

(7%)

234

248

(6%)

262

297

(12%)

(9%)

Pristiq

461

422

9%

10%

365

348

5%

96

74

30%

36%

Refacto AF/Xyntha

420

380

11%

16%

79

75

5%

341

305

12%

19%

Revatio

414

393

5%

8%

250

229

9%

164

164

-

7%

Zoloft

398

420

(5%)

(4%)

49

46

7%

349

374

(7%)

(5%)

Medrol

388

383

1%

4%

105

116

(9%)

283

267

6%

9%

Zosyn/Tazocin

378

490

(23%)

(21%)

175

267

(34%)

203

223

(9%)

(5%)

Effexor

342

537

(36%)

(34%)

102

207

(51%)

240

330

(27%)

(24%)

Geodon/Zeldox

322

753

(57%)

(56%)

218

627

(65%)

104

126

(17%)

(10%)

Zithromax/Zmax

318

335

(5%)

(4%)

9

17

(47%)

309

318

(3%)

(2%)

Prevnar/Prevenar (7-valent)

303

406

(25%)

(22%)

-

-

-

303

406

(25%)

(22%)

Fragmin

283

283

-

6%

36

32

13%

247

251

(2%)

5%

Relpax

266

250

6%

8%

160

142

13%

106

108

(2%)

4%

Rapamune

259

285

(9%)

(6%)

140

139

1%

119

146

(18%)

(13%)

Cardura

254

289

(12%)

(9%)

4

4

-

250

285

(12%)

(9%)

Aricept (c)

249

335

(26%)

(22%)

-

-

-

249

335

(26%)

(22%)

Tygacil

249

224

11%

16%

115

112

3%

134

112

20%

28%

EpiPen (d)

217

160

36%

36%

182

133

37%

35

27

30%

33%

Xanax XR

203

232

(13%)

(7%)

38

41

(7%)

165

191

(14%)

(7%)

BMP2

192

277

(31%)

(31%)

192

260

(26%)

-

17

(100%)

(98%)

Caduet

191

435

(56%)

(55%)

26

235

(89%)

165

200

(18%)

(16%)

Sulperazon

191

155

23%

22%

-

-

-

191

155

23%

22%

Diflucan

185

201

(8%)

(5%)

4

3

33%

181

198

(9%)

(5%)

Dalacin/Cleocin

176

139

27%

31%

72

35

106%

104

104

-

5%

Neurontin

172

222

(23%)

(19%)

37

51

(27%)

135

171

(21%)

(17%)

Unasyn

165

172

(4%)

(2%)

2

4

(50%)

163

168

(3%)

(1%)

Aromasin

162

294

(45%)

(43%)

10

53

(81%)

152

241

(37%)

(34%)

Arthrotec

159

182

(13%)

(11%)

90

96

(6%)

69

86

(20%)

(15%)

Inspra

156

142

10%

16%

4

3

33%

152

139

9%

16%

Toviaz

150

137

9%

13%

82

72

14%

68

65

5%

11%

Metaxalone/Skelaxin (d)

149

145

3%

2%

149

145

3%

-

-

-

-

Methotrexate

148

133

11%

11%

-

-

-

148

133

11%

11%

Protonix

140

168

(17%)

(17%)

140

168

(17%)

-

-

-

-

Alliance Revenue (e)

2,577

2,678

(4%)

(3%)

1,908

1,628

17%

669

1,050

(36%)

(35%)

All other biopharmaceutical products

5,187

4,827

7%

11%

1,926

1,541

25%

3,261

3,286

(1%)

5%

All other established products (f)

4,509

4,207

7%

11%

1,633

1,287

27%

2,876

2,920

(2%)

4%

REVENUES FROM OTHER PRODUCTS:

ANIMAL HEALTH

$3,128

$3,078

2%

6%

$1,289

$1,205

7%

$1,839

$1,873

(2%)

5%

CONSUMER HEALTHCARE

$2,276

$2,218

3%

5%

$1,054

$1,087

(3%)

$1,222

$1,131

8%

13%

OTHER(g)

$193

$211

(9%)

(8%)

$61

$65

(6%)

$132

$146

(10%)

(7%)

(a)

Total International represents Developed Europe region + Developed Rest of World region + Emerging Markets region. Details for these regions are located on the following page.

(b)

Lipitor lost exclusivity in the U.S. in November 2011 and various other markets in 2011 and 2012. This loss of exclusivity reduced branded worldwide revenues by $4.2 billion in the first nine months of 2012, in comparison with the first nine months of 2011.

(c)

Represents direct sales under license agreement with Eisai Co., Ltd.

(d)

Legacy King product. King's operations are included in our financial statements commencing from the acquisition date of January 31, 2011.

(e)

Includes Enbrel (in the U.S. and Canada), Aricept, Exforge, Rebif and Spiriva.

(f)

Includes sales of generic atorvastatin. All other established products is a subset of All other biopharmaceutical products.

Developed Europe region includes the following markets: Western Europe, Finland and the Scandinavian countries.

(b)

Developed Rest of World region includes the following markets: Australia, Canada, Japan, New Zealand and South Korea.

(c)

Emerging Markets region includes, but is not limited to, the following markets: Asia (excluding Japan and South Korea), Latin America, Middle East, Africa, Central and Eastern Europe and Turkey.

(d)

Lipitor lost exclusivity in various international markets in 2011 and 2012. This loss of exclusivity reduced branded international revenues by $914 million in the first nine months of 2012, in comparison with the first nine months of 2011.

(e)

Represents direct sales under license agreement with Eisai Co., Ltd.

(f)

Legacy King product. King's operations are included in our financial statements commencing from the acquisition date of January 31, 2011.

(g)

Includes Enbrel (in Canada), Aricept, Exforge, Rebif and Spiriva.

(h)

All other established products is a subset of All other biopharmaceutical products.

Certain amounts and percentages may reflect rounding adjustments.

PFIZER INC.SUPPLEMENTAL INFORMATION

1. Change in Reported Cost of Sales

Reported cost of sales decreased 22% in both the third quarter and in the first nine months of 2012, compared to the same periods in 2011. The decreases were primarily due to a decline in revenues reflecting reduced manufacturing volumes related to products that lost exclusivity in various markets. The decreases were also due to lower purchase accounting adjustments in 2012, lower costs related to our cost-reduction and productivity initiatives, as well as the benefits generated from the ongoing productivity initiatives to streamline the manufacturing network, and favorable foreign exchange of 8% for the third quarter of 2012 and 7% for the first nine months of 2012. The decreases were partially offset by an unfavorable impact caused by a shift in geographic and business mix.